calculation of average capital(query)

(Guest)

could anyone answerme this?

given opening capital=500000, profits during year=100000

what is the average capital?

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MANOJ CHANDRA SHARMA (JOB) (59 Points)
Replied 10 June 2010

first it is assumed that in capital profit figure is already added

therefore average capital=closing capital-1/2 of profit

= 500000-50000

= 450000

am i right ?

(Guest)

but in a book the answer is rs.550000?

shakuntala chhangani (FCA Course co-ordinator WIRC coaching centre) (2525 Points)
Replied 10 June 2010

my dear, closing capital = opening capital + profits

i.e.5,00,000 + 1,00,000 = 6,00,000

Now, avg. capital = closing capital - 1/2 of profits

=6,00,000 - 1/2* 1,00,000

= 6,00,000 - 50,000 = 5,50,000

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(Guest)

thanks for the reply.

shakuntala chhangani (FCA Course co-ordinator WIRC coaching centre) (2525 Points)
Replied 14 June 2010

Friends, in continuation, u can ask me any CPT accounts question for ur June 2010 exams. I will try to give a prompt reply

Regards, CA Shakuntala Chhangani

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